Romanian companies are benefiting now from a much wider crowd of IT specialists to include into the „tax exempted employees” section.
The actual change
When it comes to granting the income tax deduction (16%) to their employees, the companies were limited in the past, only to those employees with specific IT high studies. Starting now this limitation has been eliminated, now the companies can grant the deduction to any highly educated employee working in their IT department. The actual change is that “specific IT „ studies are no longer requested in this process.
However, we must remember that even if this aspect was changed, the old set of rules is in place still, thus the companies must be in compliance with them also.
The change has been received with a lot of enthusiasm by both employees and companies, as for both parties this novelty can bring added value: on one hand more employees will be able to access this special world of “tax exempted employees” and not pay income tax to the state, on the other hand the companies will show once more interest in providing the best advantages for their IT specialists by doing all efforts for including as many employees in this program as they can. On some level, it can even be considered a motivation or retention tool for the HR department, if presented in a business wise way.
For IT specialists this change is good news on all levels, as in time the IT working field developed 2 communities: IT tax exempted employees with the “right” College diploma and IT non exempted employees having the same tasks as exempted ones, but lacking the “correct” College diploma. It was of course frustrating for the second community not to have access to this facilitation granted by the Romanian state, considering they were performing the same activities as their colleagues.
Second change relates to the European Union, European Economic Area and Swiss Confederation citizens. Starting now they too can benefit from this facilitation if they equate their diplomas through specific Education and Research Ministry structures. Remember, these diplomas must be proof of graduation from a long-term high education University, or received after finalizing first cycle of a Bachelor studies program.
Risk free approach to apply the changes
Above mentioned changes are great, however loosing the rules brings often complications when starting to actually apply them!
In order to stay on the safe side, we recommend to the companies to avoid abusive use like, transforming an employee non IT into an IT specialist one, just for granting him the income tax facilitation. This is the roote you should start when you will assess your company situation and the possibilities of benefiting of these new law changes.
In Romania, the position each employee is assigned to, must be present in, our country level valid, Occupational Code. When The Code was created, each position received a certain set of rules to be respected, education level and even certain specialization to graduate from, in order to become eligible for that specific position. Of course the IT field has constantly expanded with various positions, as the technology era advanced more and more, new positions were created for a better mirroring of the actual work they were performing.
Presently, one of the mandatory rules for a company to grant tax exemption facilitations to its employees, is to have its IT specialists assigned solely on one of below occupations, mentioned in the law and Occupational Code:
- Database administrator
- Information Analyst
- Systems engineer in informatics
- Software systems engineer
- Informatics project manager
- Informatics systems designer
- Informatics systems programmer
How do the companies decide who qualifies to above positions and who does not?
The right way to assign an employee to one of above specific positions is to respect the occupational standard behind the position. Initial occupations had, each one, an occupational standards dedicated. The standard served as user manuals for each position and was created by the National Authority for Qualifications. When a new occupation is now created and included into the Occupational Code, usually has a set of recommended standards to sustain it.
Presently, all above positions have occupational standards developed, even if not all were created by the National Authority for Qualifications. Other educational entities collaborated and brought their expertise for these standards to exist, thus even if some are more detailed than others, we recommend you as IT company to use them trustfully.
Correct applicability of the new changes will bring to both you as company and your employees the comfort of being on the safe side of the law!